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A Prenuptial Agreement Can Protect Your Business During Divorce

Posted on in Property Division

A Prenuptial Agreement Can Protect Your Business During DivorceBusiness owners must prioritize securing their business and its assets during a divorce. In most cases, a business is a marital property that is included during the division of property. Business owners are unlikely to split ownership with a divorcing spouse who did not own or help run the business during their marriage. However, the two sides may dispute the value of the business and how much the other spouse should receive to offset that value. As a business owner, you can plan ahead to protect your business during a potential divorce by including it in a prenuptial or postnuptial agreement.

Why Is Your Business a Marital Property?

Spouses normally differentiate between marital and nonmarital properties based on whether one of them purchased the property before their marriage. However, a business predating a marriage is not enough evidence to make it a nonmarital property:

  • You may have invested marital money into your business; 
  • Your business may be the primary source of income in your marriage; and
  • Your spouse may have sacrificed part of his or her career to allow you to focus on your business.

Your spouse can claim that the amount that your business increased in value during your marriage is marital property.

Prior Agreement

You know that you would want to keep complete ownership of your business in the event of a divorce but may be uncertain about whether your spouse would fight you for control. You could spend a lot of time arguing with your spouse about what your business is actually worth. The advantage of a prenuptial or postnuptial agreement is that you negotiate these matters without your divorce-related emotions interfering. In the agreement, you can:

  • Establish that the business is a nonmarital property if it predated your marriage;
  • Determine the method you will use to assess the business’s value;
  • Decide what percentage of the business’s value that your spouse will receive; or
  • Choose which of you will keep the business if you are co-owners.

Predetermining issues related to your business will save you time during your divorce negotiations and potentially allow you to avoid going through the appraisal process. Your spouse may try to gain more from your business during an actual divorce but would need to prove why you should not follow the terms of the agreement.

Contact a McHenry County Divorce Attorney

Protecting your business during a divorce is also protecting your livelihood and potentially the livelihoods of those who work for you. A Crystal Lake, Illinois, divorce lawyer at Botto Gilbert Lancaster, PC, can help you keep your business intact during your divorce. Schedule a free consultation by calling 815-338-3838.

Source: 

https://www.entrepreneur.com/article/220124

Illinois State Bar Association State Bar of Wisconsin Crystal Lake Chamber of Commerce Illinois Trial Lawyers Association McHenry County Bar Association
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